The New York ratings agency announced about 11 A.M. Eastern Time this morning that ratings on Tacoma's debt were being downgraded by one notch, to AA+ with a negative outlook, from AAA (the highest possible rating), with a negative outlook. The news was not unexpected and is likely the direct result of the U.S. federal debt downgrade.

The original notification on the S&P website, located here, appears to have moved or been removed from the S&P site. My reporting about the general downgrade is based on original notification posted on S&P site.

A later report from S&P, released at 5:17 P.M. Eastern Time, said that about $40 million in bonds issued by the City of Tacoma for a federal courthouse project also were downgraded a notch, to AA+ with a negative outlook, from AAA with a negative outlook.

It's now unclear whether those are the only bonds affected, or whether the rating agency issued a more general downgrade.

The "negative" indicates there may be more downgrades in the future. Other municipalities had similar downgrades announced, include Miami, Fla.; the Atlanta Downtown Development Authority, Ga.; and The Board of Governors of the University of North Carolina.

A City of Tacoma spokesperson said officials were not initially aware of the downgrade, and learned about it through news reports. Another spokesperson said the city will respond shortly to clarify what ratings exactly have been affected. A call to Standard & Poor's has not been returned. I'll update this as I learn more.

When ratings agencies downgrade bond credit ratings it means they recognize there is more risk in the investment than they initially thought. In this case, it's likely that S&P believes the City of Tacoma has a significant reliance on federal money and as a result, the federal credit downgrade impacts the Pacific Northwest city.

Industry experts believe more municipalities will be downgraded in the coming week, as the rating agencies determine who has exposure to problems with the federal debt. The downgrades could mean that bond interest rates go up and bond prices go down, which could hurt investors.